With the Australian dollar seemingly headed towards levels not seen since the days of the Fraser Government, there is the usual round of sensitivity analysis from the investment banks on Australian stocks.
While such analysis is extremely useful, accurately picking currency levels is akin to pinning the tail on an agitated donkey. Economists have little or no idea of where it is going or when it will come crashing back to earth again.
It is precisely because of this inability of economists to pick forecasts out three months on the Euro/Yen that so many of my former colleagues remain sceptical of Nicolas Stern’s prediction of the end of the world in several decades.
However, what the movement in the currency once again highlights is the current unsustainability of the domestic Australian automotive sector. Governments of all political persuasions at all levels have been only too keen to provide various forms of taxpayer support to the domestic Australian automotive sector.
Given the fact that this has done nothing to halt the loss of jobs, taxpayers are entitled to ask exactly what long-term, sustainable, internationally competitive industry have we got for the hundreds of millions (or is that billions) of dollars we have effectively handed to overseas automakers. The entire Australian automotive sector must surely be under immense pressure at this time, particularly those players reliant on exports.
Autos built overseas look increasingly cheaper, the Chinese manufacturing machine continues to pressure its competition, and the Australian sector simply is not in the hybrid game.
It is time for politicians and union leaders to do the right thing and acknowledge that for all the taxpayer support, the reality is that the sector will decline further, more job losses will ensue, and workers will once again be left disillusioned with big business, unions and government.
Surely Australian workers in the auto and related components sector deserve the truth. That, of course, would only happen in a movie. Instead, we only ever seem to witness a parade of political and union leaders returning like Neville Chamberlain from meetings with automakers waving a “peace in our time” undertaking that all is well and workers have nothing to worry about.